BOE Officials Say Room for Improvement on Forecasting, Analysisby
MPC member survey shows concern about quality of debate, staff
Carney: fewer policy meetings will improve policy discussion
Bank of England policy makers said there was room for improvement in the quality of the central bank’s forecasting and analytical processes, and voiced concern about retaining good staff.
The regular survey of Monetary Policy Committee members found in general responses were “very positive” on the drafting of the minutes of their meetings and of their Inflation Report that contains their quarterly economic projections, according to the record of a gathering of the BOE’s governing body. Also, conjunctural assessments and pre-MPC meeting briefing materials scored highly.
However, while there had been advances, “scores were less positive for the effectiveness of forecast processes,” officials said. “MPC members seemed to rate the quality of inputs into some Inflation Report meetings more highly than the quality of the subsequent discussion in the committee.”
BOE Governor Mark Carney said the move to fewer MPC meetings later this year should allow policy makers to improve the value of their debate. The switch to eight meetings a year from 12 starting in October would allow officials to focus less on the data “sausage machine,” and help deepen the quality of the analysis and discussion, officials said.
The MPC members’ concerns and Carney’s response were published in the record of the April 28 meeting of the Court of Directors, released last week.
Another key worry highlighted by the four independent MPC members in the survey was “maintaining the quality and motivation” of their individual support staff in the BOE’s External MPC Unit, the minutes showed.
The unit has seen a number of staff departures for more lucrative careers outside the bank in London’s financial district, including at Goldman Sachs Group Inc.
In response to the concerns, Gareth Ramsay, director of the BOE’s Monetary Analysis division, said “he understood the issue and was committed to ensuring that people should regard a spell in the MPC unit as a positive and rewarding part of an economist’s career in the bank.”
The Court minutes also released details about the annual questionnaire of members of the BOE’s Financial Policy Committee, which was set up in the aftermath of the 2008 crisis and aims to maintain stability of the financial system.
While in general FPC responses had strengthened across the board, with staff support and analysis “highly rated,” further work was needed on some areas, including the effectiveness of the committee’s communications, officials said. Steps were being taken to bring in new authors and better co-ordination in the process for drafting and approving the FPC record, the minutes showed.
Both the MPC and FPC surveys showed officials on both committees said further work was needed to make joint meetings of the two panels more effective. In that vein, Carney and the BOE’s deputy governors had agreed a new approach on how these should operate, the minutes said.